Industry Letters

General Industry Letters

Mortgage Banking Letters

The Record Retention Requirements of the Federal Electronic Signatures in Global
and National Commerce Act

April 30, 2001

TO THE CHIEF EXECUTIVE OFFICER OF THE INSTITUTION
ADDRESSED

The purpose of this guidance letter is to clarify the New
York State Banking Departments ("Department") position on the record
retention requirements of the federal Electronic Signatures in Global and National
Commerce Act ("E-Sign" or "the act").

E-Sign was enacted on June 30, 2000. The act is intended
to eliminate legal barriers to the use of electronic commerce by giving documents stored
or signed electronically the same force and effect as more traditional paper documents.
The act is broken down into two basic parts: 1) electronic signatures, and 2) electronic
record retention. As was previously stated, this letter will deal only with the
record retention provisions of the E-Sign law.

Under the record retention provisions of E-Sign,
regulatory agencies are required to remove all impediments to the use of electronic
records in interstate or foreign commercial transactions for their regulated entities or
licensees. The act provides a framework for the use and retention of electronic records in
three basic steps. First, it generally recognizes that electronic records are as legally
effective, valid and enforceable as paper writings, with certain exceptions. Second, it
recognizes that laws should be neutral as to the specific technologies and means used to
create such records and signatures. And third, it requires that the legal effect, validity
or enforceability of a document may be denied if it is not retained in a manner that
accurately reproduces the document and is accessible to the parties of interest.

On February 28, 2001 the Department published a public
notice in the State Register announcing its consideration of rules relative to the
retention of electronic records. Subsequently, the Department performed a review of its
rules, regulations and guidelines, and determined that there are no impediments to
Department regulated entities retaining their records in an electronic format, and
therefore no rulemaking is necessary. Moreover, in keeping with the spirit of Governor
Patakis "Government Without Walls" initiative, the Department encourages
the use of electronic record keeping.

Your institutions record retention systems, controls
and practices will be reviewed by New York State Banking Department examiners as part of
their overall supervisory examination. Consistent with the best practices for internal
controls, the Department expects that all supervised institutions ensure the integrity,
authenticity and accessibility of the records that they are required to retain. Should you
have any questions regarding this topic, please contact Liam McLaughlin, Esq., Assistant
Director of Banking Research and Statistics, at (212) 618-6986 or by e-mail at liam.mclaughlin@banking.state.ny.us.